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INCOME TAX RETURN
Income tax return in India is a document that individuals, businesses, and organizations are required to file with the Income Tax Department of India, reporting their income, deductions, and tax liabilities for a specific financial year. It is an important obligation for taxpayers and plays a vital role in the overall taxation system of the country.
Here's an overview of the income tax return process in India
Who should file
Individuals, Hindu Undivided Families (HUFs), companies, partnership firms, and other entities that meet specific income criteria are required to file income tax returns.
Financial year and assessment year
The financial year (FY) in India runs from April 1 to March 31, while the assessment year (AY) is the year immediately following the financial year. For example, FY 2022-2023 refers to the period from April 1, 2022, to March 31, 2023, and AY 2023-2024 refers to the year in which the income tax return for that financial year is filed.
Types of income tax returns
The Income Tax Department has different forms for different categories of taxpayers. Some commonly used forms include ITR-1 (Sahaj) for individuals with income from salary, one house property, and other sources; ITR-2 for individuals and HUFs not having income from business or profession; ITR-3 for individuals and HUFs having income from a proprietary business or profession, and ITR-6 for companies.
Filing deadlines
The due date for filing income tax returns varies based on the category of taxpayers and the type of income tax return form. Typically, the deadline for individuals and HUFs is July 31 of the assessment year, but it can be extended by the government.
Gathering information
Taxpayers need to collect and organize relevant documents such as Form 16 (provided by the employer), bank statements, investment proofs, property details, and other supporting documents related to income and expenses.
Computing taxable income
Taxpayers calculate their total income by aggregating income from various sources and deducting allowable deductions and exemptions under the Income Tax Act, such as deductions for investments, house rent, medical expenses, and education loans.
Filing the return
Taxpayers can file their income tax returns online through the Income Tax Department's e-filing portal or through authorized intermediaries. The return can be submitted electronically using a digital signature or by generating an acknowledgment receipt (ITR-V) that needs to be physically signed and sent to the Centralized Processing Centre (CPC) within the specified timeframe.
Verification
After filing the return, it is necessary to verify it within a prescribed period. Verification can be done electronically using methods such as electronic verification code (EVC), Aadhaar OTP, or by sending a signed physical copy of ITR-V to the CPC.
Assessment and refunds
After filing the return, the Income Tax Department processes it and assesses the tax liability. If the tax paid exceeds the actual liability, a refund is issued to the taxpayer. In case of any discrepancies or scrutiny, the taxpayer may be required to provide additional information or attend assessment proceedings.
Assessment and refunds
After filing the return, the Income Tax Department processes it and assesses the tax liability. If the tax paid exceeds the actual liability, a refund is issued to the taxpayer. In case of any discrepancies or scrutiny, the taxpayer may be required to provide additional information or attend assessment proceedings.
Penalties for non-compliance
Failing to file income tax returns or underreporting income can result in penalties and interest charges imposed by the Income Tax Department.